Opinion
CIVIL ACTION NO. 94-4063 SECTION "R"
September 7, 1995
ORDER
This matter is before the Court on a motion to dismiss for lack of personal jurisdiction and improper venue by defendants, Texas Commerce Bank National Association ("TCB"), R. Sells Neuhaus ("Neuhaus"), Jane S. Root ("Root"), and Robert J. Magner ("Magner"). The motion to dismiss for lack of personal jurisdiction is granted for the reasons that follow.
I. BACKGROUND
Plaintiffs, Perrin Butler and Lynn Mauney (collectively known as the "Louisiana plaintiffs") and Ashley Butler and Allison Butler (collectively known as the "Alabama plaintiffs"), all own royalty interests in the Duval County Ranch ("DCR"), located in the State of Texas. TCB is the administrator of those interests pursuant to written agency agreements between the royalty owners and Ameritrust, TCB's predecessor in interest. Root and Neuhaus are employees of TCB, engaged in the administration of the DCR Trust.
In March 1992, Ameritrust sent out revised agency agreements to all of the approximately seventy DCR royalty owners. On April 30, 1992, Ameritrust mailed a memorandum to all DCR royalty interest owners, including the Louisiana plaintiffs, who had not returned their revised agency contracts. In it, Ameritrust stated that if it "does not receive this fully-executed agreement by June 1, 1992, we will assume that you are no longer interested in having Ameritrust serve as your agent and will therefore take appropriate steps to transfer to you your Royalty interest." In May 1992, all four plaintiffs returned the revised agency agreements allowing Ameritrust to remain their agents. On June 30, 1992, Ameritrust sent another memorandum to all DCR royalty owners stating "all of the royalty owners have renewed their contracts."
Subsequent to the renewal of the agency agreement, TCB engaged the services of Mineral Management Information Systems, Inc. (MMIS), a Louisiana corporation with offices in Lafayette, Louisiana and Houston, Texas, to determine the amounts due all DCR royalty owners. (See Letter from Timothy J. Mahoney and Charles P. Upshaw to Allison A. Butler of May 26, 1993.) The principal in MMIS, Timothy J. Mahoney, is also a royalty owner in the DCR Trust who resides in Texas and Louisiana. Based on the recommendation of MMIS, TCB retained the services of Magner, an attorney domiciled in Texas, to institute a lawsuit against Mobil Oil Corporation ("Mobil") on behalf of the royalty owners. On June 10, 1992, Magner filed suit against Mobil in Texas for breaching its mineral lease and underpayment of royalties to the DCR royalty owners.
On December 20, 1993, Mobil settled the suit for $500,000 and Mobil's overriding royalty interest in DCR worth an undetermined amount. TCB allegedly agreed to pay the overriding royalty interest, valued by TCB at $185,000, plus $25,873 in cash, as Magner's attorney's fee. (Letter from Ameritrust to DCR Royalty Owners of January 10, 1994.) After litigation-related expenses, the royalty owners received over $300,000. Plaintiff s disputed the valuation of the overriding royalty interest and its award to Magner. Plaintiffs subsequently filed suit in the United States District Court for the Eastern District of Louisiana against defendants alleging negligence and breach of fiduciary duty.
II. LAW AND ANALYSIS
Motion to Dismiss for Lack of Personal Jurisdiction
An analysis of whether personal jurisdiction extends to the out of state defendants in this case involves two distinct inquiries. First, Louisiana's Long Arm Statute must authorize jurisdiction over the defendants. Second, this exercise of jurisdiction must meet the requirements of the Due Process Clause of the United States Constitution. See International Shoe v. Washington, 326 U.S. 310 (1945).
A federal district court sitting in diversity has the same jurisdictional power as the courts of the state in which it sits. Wilson v. Belin, 20 F.3d 644, 646 (5th Cir. 1994). Therefore, the Court must initially look to Louisiana's Long Arm Statute for its authority to extend personal jurisdiction over defendants. Because Louisiana's Long Arm Statute reaches as far as the federal Constitution will allow, the Court will focus its attention on the due process requirements for establishing personal jurisdiction. See Dalton v. RW Marine, Inc., 897 F.2d 1359, 1361 (5th Cir. 1990); La. Rev. Stat. § 13:3201.
Under the Due Process Clause, plaintiffs must first show that the nonresident defendants "purposely established minimum contacts in the forum state." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). If that requirement is met, plaintiffs must demonstrate that "the assertion of personal jurisdiction would comport with `fair play and substantial justice.'" Burger King, 471 U.S. at 476 (quoting International Shoe, 326 U.S. at 320).
Under minimum contacts analysis, the Supreme Court has held that the foreseeability of injury occurring in the forum state "has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980). Instead, "the foreseeability that is critical to due process analysis . . . is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." Id. at 297.
Minimum contacts may be established either by contacts that give rise to specific jurisdiction or those that give rise to general jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984); Wilson, 20 F.3d at 647. Specific jurisdiction arises when the nonresident defendant's contacts with the forum state stem from, or are directly related to, the cause of action. Helicopteros, 466 U.S. at 414 n. 8; Wilson, 20 F.3d at 647. General jurisdiction is proper when the nonresident defendant's contacts with the forum state do not arise from the cause of action, but are both "continuous and systematic." Helicopteros, 466 U.S. at 414 n. 9; Wilson, 20 F.3d at 647.
When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident. Wilson, 20 F.3d at 648. However, the Court must take the uncontroverted allegations in plaintiff's complaint as true, and "conflicts between the facts contained in the parties' affidavits must be resolved in the plaintiff's favor for purposes of determining whether a prima facie case for personal jurisdiction exists." Buillion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990).
TCB
Plaintiffs do not argue that the Court has general jurisdiction over TCB; rather, they contend that TCB has sufficient contacts with Louisiana to support specific jurisdiction. In its Opposition to defendants' motion to dismiss, plaintiffs allege that the following contacts by TCB with the forum state of Louisiana constitute "minimum contacts" sufficient to justify the exercise of specific jurisdiction:
1. TCB's predecessor in interest, Ameritrust, solicited agency contracts relative to DCR in Louisiana;
2. The agency contacts solicited in Louisiana have no specific time frame. To date TCB has not sought to terminate its agency contracts with the Louisiana complainants.
3. TCB has utilized the services of MMIS in connection with its performance pursuant to the agency contracts. MMIS is a Louisiana corporation.
4. TCB filed suit against Mobil with respect to royalties covered by its agency contracts. These agency contracts involved Louisiana residence [sic] including Mr. Butler and Ms. Mauney. As noted, there is a total of approximately fifteen Louisiana owners.
5. TCB retained counsel to represent DCR royalty owners including the Louisiana complainants who in turn filed suit against Mobil including the Louisiana complainants as plaintiffs in that litigation;
6. TCB arranged for the services of MMIS with respect to the Mobil litigation. MMIS performed substantial services resulting in the payment in excess of thirty thousand dollars in consulting fees in connection with the Mobil litigation;
7. MMIS insulted [sic] with TCB with respect to substitution of the override offered by Mobil in exchange for cash as part of the counsel fees to be paid to Mr. Magner.
(Plaintiff's Opposition Memorandum at 14-15.)
The Court recognizes that jurisdiction "may not be avoided merely because the defendant did not physically enter the state." Burger King, 471 U.S. 462, 476. However, the Court finds that TCB's contacts with the State of Louisiana that give rise to or are related to plaintiff's cause of action are too tenuous to justify specific jurisdiction. TCB has no offices or employees in Louisiana; nor is it authorized to do business in Louisiana. (Affidavit of Melanie McKittrick (McKittrick Aff.) ¶ 6.) The controversy in issue involves the payment of fees to a Texas lawyer as part of the settlement of a Texas lawsuit involving royalties on Texas property. The agency agreements between TCB and plaintiffs were prepared in Texas and involved the administration of Texas mineral property. Virtually all of TCB's substantive actions with respect to the property, the royalties, and the hiring and compensation of Magner took place in Texas.
The Supreme Court has stated that "[i]f the question is whether an individual's contract with an out-of state party alone can automatically establish sufficient minimum contacts in the other party's home forum, we believe that answer clearly is that it cannot." Burger King, 471 U.S. at 478. While it is true that pursuant to the agency contract, TCB collected royalty payments in Texas and mailed them to the royalty owners, including the Louisiana plaintiffs, that alone does not justify personal jurisdiction. See Kostuch v. Southtrust Bank of Alabama, N.A., 665 F. Supp. 474, 475-76 (M.D. La. 1987) (no personal jurisdiction over trust that collected premiums and disbursed funds to forum state plaintiffs). Plaintiffs fail to demonstrate that litigation would be foreseeable in Louisiana as required under the due process analysis. See Caldwell v. Palmetto State Savings Bank of S.C., 811 F.2d 916, 918 (5th Cir. 1987) (no personal jurisdiction where only contact with forum state was mail to plaintiff); T.J. Raney Sons, Inc. v. Security Savings Loan Assoc., 749 F.2d 523, 525 (8th Cir. 1984) ("The district court properly held that the use of interstate mail, telephone or banking facilities, standing alone, was insufficient to satisfy the requirements of due process.").
Plaintiffs allege that TCB's predecessor in interest "solicited" their business in Louisiana. In this regard, they point to no conduct indicating how the original agency agreements came about. Rather, they rely on conduct in April and May of 1992 in which the agency contracts were renewed. (See Plaintiff's Opposition Memorandum at 2-3, 14.) The claimed "solicitation" consisted of sending revised agency agreements to the royalty owners for signing and return. (Deposition of Jane S. Root ("Root Depo.") at 12-13.) TCB and plaintiffs did not engage in negotiations over the terms of the renewal. Id. The materials were sent to persons who had already consented to having TCB's predecessor act as their agent. They were not a solicitation to new parties. In addition, plaintiffs point to the April 30, 1992 memorandum mailed to all royalty owners who had not returned their agency agreements. Far from the personal visits that other courts have required for finding personal jurisdiction through a solicitation, the April 30 memorandum merely stated that if the agent did not hear from the royalty owners by June 1, 1992, it "will assume that you are no longer interested in having Ameritrust serve as your agent." See Serras v. First Tennessee Bank, N.A., 875 F.2d 1212, 1217 (6th Cir. 1989) ("In the present case, the plaintiffs rely not only on alleged telephone calls but also on an allegation that the defendant actually travelled to Michigan to solicit their business, and actually made fraudulent representations while in Michigan."); Sanders v. State Street Bank and Trust Co., 813 F. Supp. 529, 532 (S.D. Tex. 1993) (before being accepted as pension plan administrator, representatives from Massachusetts bank traveled to Texas City, Texas to make a sales presentation to employees). The alleged solicitation activity is not enough to support personal jurisdiction.
In apparent reliance on language in Burger King concerning long-term contracts, plaintiffs allege that the agency agreements "have no specific time frame," nor have they been terminated. However, that reliance is misplaced. In Burger King, the Supreme Court upheld jurisdiction, mentioning that the defendant-franchisee "entered into a carefully structured 20-year relationship that envisioned continuing and wide reaching contacts" with the franchisor in the forum. Burger King, 471 U.S. at 480. In contrast, under the agency agreement "[e]ither party may revoke the contract by giving to the other sixty (60) days written notice of revocation." (Agency Agreement between Ameritrust and Perrin Butler of May 29, 1992.) The agreement here did not envision "continuing and wide reaching contacts" in Louisiana as the Burger King franchisor-franchisee agreement did.
In addition, the Burger King Court based its holding that there was personal jurisdiction on a number of factors not present here. The defendant "deliberately reached out beyond Michigan and negotiated with a Florida corporation for the purchase of a long-term franchise and the manifold benefits that would derive from affiliation with a nationwide organization." Burger King, 471 U.S. at 479-80. In the present case, plaintiffs point to no negotiations of a long-term relationship between TCB and the Louisiana plaintiffs; rather, the facts they rely on show that TCB's predecessor merely sought to preserve the status quo by seeking renewal of the revised agreements. The Burger King Court also relied on provisions in the franchise agreement which provided that disputes would be governed by the law of Florida, the forum state. Id. at 481. There is no analogous provision in the agency agreement providing for Louisiana law to be applied. Indeed, in Burger King, Florida was the hub of a nationwide franchise network. Here, Texas, not Louisiana, serves a similar function as the locus of administration of the interests of DCR mineral owners who live in various states.
Plaintiffs also assert that TCB's use of MMIS, a Louisiana corporation, for consulting purposes was proof of minimum contacts with Louisiana. However, the agreement between TCB and MMIS was reached in Texas, and TCB dealt with MMIS about Magner's fee and the Mobil litigation in Texas. (See Root Depo. at 17, 38, 57.) Even if TCB dealt with MMIS from its Lafayette, Louisiana office, personal jurisdiction would not exist. See Baron Company, Inc. v. Bank of New Jersey, 497 F. Supp. 534 (E.D. Pa. 1980). In Baron, a New Jersey bank was the liquidating trustee of the Garden State Racing Association Liquidating Trust ("GSRALT"). Id. at 535. In the course of its duties, it contacted Baron, a Pennsylvania corporation, for help in marketing GSRALT's assets. Id. at 536. The parties entered into an agreement in New Jersey and conducted all meetings there. Id. The only contact with the forum state of Pennsylvania were telephone calls and correspondence between the two parties. Id. The court held that use of a Pennsylvania corporation to market New Jersey assets was not enough to justify personal jurisdiction over Baron. Id. at 537. Likewise, the simple use of a Louisiana corporation for consulting purposes, even if it is related to the agency agreement and the present litigation, is not enough to warrant personal jurisdiction. The link is even more attenuated here, since in Baron, the entity that was hired was a party to the litigation; MMIS is not a party to this action.
Plaintiffs also claim that because they were a party in the Mobil litigation initiated by its agent TCB, the Court has personal jurisdiction over TCB. Even granting plaintiffs' assertion that the Mobil litigation is directly related to the present case, personal jurisdiction does not exist. The Mobil litigation was conducted in Texas state court, and TCB did not have any contacts with the State of Louisiana other than acting as an agent for some Louisiana plaintiffs in the case. That is not sufficient for personal jurisdiction over TCB. Accordingly, defendant TCB's motion to dismiss for lack of personal jurisdiction is granted.
Individual defendants, Neuhaus and Root
During oral arguments on August 16, 1995, plaintiffs conceded that the Court did not have personal jurisdiction over individual defendants, Neuhaus and Root. Accordingly, the motion of individual defendants, Neuhaus and Root, to dismiss for lack of personal jurisdiction is granted.
Individual defendant, Magner
Plaintiffs claim that the Court has personal jurisdiction over Manger by virtue of his representation of them in the Mobil litigation. The Court disagrees.
The Fifth Circuit has stated that "[t]he bare existence of an attorney-client relationship is not sufficient" to confer personal jurisdiction over a nonresident attorney. Trinity Indus., Inc. v. Myers Assoc., 41 F.3d 229, 230 (5th Cir. 1995). In Trinity, the Fifth Circuit found personal jurisdiction in Texas where the nonresident attorney considered Trinity, a Texas corporation, a "major client;" represented the company over eight years; and appeared pro hac vice for the client in the Northern District of Texas over a three-year period. Id. at 231. Here, there is nothing more than an attorney-client relationship between an out-of-state defendant and an in-state client. Magner is a resident of Texas who practices law there. He brought the Mobil litigation involving Texas property in Texas state court, and all his legal services were provided in the State of Texas. (See Affidavit of Robert J. Magner ("Magner Aff.") ¶¶ 10-12.) The only connection he had with Louisiana was through his representation of the DCR royalty owners, some of whom were Louisiana residents. His disputed fee agreement was reached in Texas, not Louisiana. Although plaintiffs claim that Magner dealt with MMIS, which was incorporated in Louisiana, the state of MMIS's incorporation is simply insufficient to confer jurisdiction over Magner.
Magner did not even have in-person dealings with the plaintiffs. (Magner Aff. ¶¶ 12-13.) Instead, TCB's predecessor in interest, Ameritrust, acting in its capacity as the royalty owners' agent, retained Magner and was Magner's contact throughout his representation. (Magner Aff., ¶ 12). The Eighth Circuit found in an analogous case that this was not enough to warrant personal jurisdiction. Austad Co. v. Pennie Edmonds, 823 F.2d 223 (8th Cir. 1987).
In Austad, a New York corporation engaged the services of a New York law firm in connection with a patent infringement case. Id. at 224. Austad Company, a South Dakota corporation, agreed to be a coplaintiff in the suit. Id. During the course of the representation, the law firm's primary contact was with the New York corporation that hired it. Id. The law firm's only connection with Austad beyond representing it was when the firm sent a lawyer to Austad's South Dakota office for document review and interviews. Id. at 225. The court held that these contacts were not enough to justify personal jurisdiction. Id. at 226-27. The contacts were even fewer here, since plaintiffs have failed to show that Magner even entered Louisiana in connection with the case. (See Magner Aff. ¶ 16).
Accordingly, Magner's motion to dismiss for lack of personal jurisdiction is granted.